1. Responsible Borrowing UASFAA Conference MARCH 2019 Presented by Jessica Terry and Vanessa Martineau
AUTHOR’S NAME HERE

2. AGENDA The Problem WGU Background RBI Experimental Site
Recommended Amounts
Student Loan Scenario Calculator
Results So Far
Next Steps
Award Letter
Recommendations
Group Participation
Questions

3. The problem – a.k.a. Why does this matter?
Federal student debt now exceeds $1.4 trillion
More than 1 million student borrowers default each year
Nearly 40% are expected to default by 2023
48% of student borrowers either didn’t know or incorrectly estimated the amount they have borrowed
52% of borrowers are unaware that interest accrues while in school
As Financial Aid Administrators, what can we do to ensure that our students are informed, responsible borrowers?

4. Western governors university
Non-profit, founded in 1997
113,000+ full-time students in all 50 states, and 133,000+ graduates to date
60+ degrees in 4 colleges for high-demand fields
Competency-Based Education
Completely online
Academic Year is two consecutive 6-month terms
~$7,000 per year, “all you can learn”
Low Cost of Attendance

5. Western governors university
The Average WGU Student:
Prior college experience
Existing student loan debt
Needs:
Flexibility
Access
Affordability
Ability to leverage knowledge and skills already acquired
Opportunity to advance career, not just begin or change
WGU is committed to fostering a culture of responsible borrowing through a variety of innovative initiatives.

6. Responsible borrowing initiative (RBI) – experimental site
Started January 2013
U.S. Department of Education study to limit borrowing for certain WGU students
Target population is students entering WGU with significant prior debt
Effectively limits borrowing to direct costs (Tuition & Fees)
$30,000 Outstanding Principal Balance
(Avg. OPB: $43K)
Limited to $7,500 per Academic Year
Undergrad
Student
$40,000 Outstanding Principal Balance
(Avg. OPB: $62K)
Limited to $8,500 per Academic Year
Graduate Student

7. Recommended amounts Introduced at WGU in July 2013 Select My FA Plan
Maximum eligibility is displayed
Students are encouraged to accept “Recommended Amounts”
Recommended Amounts cover only Tuition and Fees (no excess funds)
Tough transition, particularly for continuing students
Retrain and adjust expectations

8. Recommended amounts

9. Recommended amounts

10. Recommended amounts Do you want to be awarded federal student loans?

11. Student loan scenario calculator
Provides students with full visibility of their total student loan debt – including prior college debt and projected debt at graduation from WGU
Includes estimated monthly payments in standard repayment terms
Shows the financial impact of program acceleration
Presented at key moment of decision-making
Using technology to “gamify” the financial aid decision-making process
Allows students to take a more active role in their financial aid

12. Student loan scenario calculator

13. Student loan scenario calculator
RECOMMENDED AMOUNT
MAXIMUM AMOUNT

14. Student loan scenario calculator
12 CUS PER TERM – 9 TERMS TO GRADUATION
20 CUS PER TERM – 6 TERMS TO GRADUATION

15. Average borrowing per student decreased 40%
Results so far
Average borrowing per student decreased 40%
Average Borrower Indebtedness (ABI) declining
Calculated for undergraduates graduating between July and June for the corresponding award year
AY 2018 = $15,374

16. Results so far
From July 2013 – June 2018, average borrowing per student went from $7,870 per year to ~$4,640 per year
Loan repayment rate (principal reduction within 3 years)
WGU = 54% (from College Scorecard)
Cohort Default Rates (CDR – 3 year) trending down
WGU rate less than half the national average (11.3%)
FY2011 = 6.6% FY2012 = 5.0% FY2013 = 4.8% FY2014 = 4.6% FY2015 = 4.1%
WGU rate lower than national average of every 4yrs(+) segment
Private, For-Profit = 14.3% Public = 7.1% Private, Nonprofit = 6.6%

17. WGU Responsible Borrowing – Next steps
Scholarships
Scholarship search engine to be made widely available, particularly during key decision-making times
Payment Plans
More flexible out-of-pocket payment options while enrolled to reduce reliance on student loans
Student Loan Scenario Calculator Enhancements
Add an out-of-pocket payment plan to the calculator
Financial Wellness
Offer more financial literacy/wellness resources and courses to enrolled students
New Award Letter

18. Award Letter Old/Current Award Letter: New Award Letter:
Compliance-oriented
Does not take into account the student experience
New Award Letter:
Partnership with CampusLogic (3rd party servicer)
More user-friendly
Delivered in the form of an with a link to a dynamic web page with their own unique Award Letter
Sent after students make decisions about their funding

19. Award Letter Goals: Improve the student experience
Break out the difference between direct and indirect costs (encouraging students to borrow only direct costs)
Offer information that is specific to each student
Enhance students’ self-service options
Provide students with access to resources specific to their funding needs

20. OLD / CURRENT AWARD LETTER
NEW AWARD LETTER
OLD / CURRENT AWARD LETTER

21. recommendations
Think about the student experience – increase gamification
Present students with tools and information at key decision-making moments
Use clear, easy-to-understand language in Award Letters and other communication with students – obscuring costs puts students at risk of dropping out, which is a major predictor of default
Provide students with an easy way to opt for less than their maximum loan eligibility
Show students information about the total amount they’ve borrowed and projected debt and repayment early and often
Consider using .gov links in financial aid communication
Don’t hesitate to get involved in a Department of Education Experimental Site

22. recommendations
Get everyone involved! Reducing student loan debt should be an institution-wide initiative, not just a Financial Aid project
Secure buy-in and investment from your institution’s central administration by connecting responsible borrowing to your existing mission and focus
Partner with other departments to capitalize on existing resources
Empower other student-facing staff and faculty to integrate financial wellness and responsible borrowing into their interactions with students
Recognize that this is likely a long and difficult process, but the results make the effort worthwhile
Even small changes can have a big impact!

23. Share with the group what your institution is doing!
What are you doing in your institution to encourage responsible borrowing?
Share with the group what your institution is doing!

24. Additional information / questions
Vanessa Martineau –
Jessica Terry –
Questions?